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"Financial incentives bolster a push for solar"

Oregon is pushing solar energy at a premium price. A new pilot project will reward a select group of homeowners and businesses with monthly checks for installing solar cells. Customers of the state's largest utilities will be funding the program through their electric bills

By Michael Rose • Statesman Journal >>click here to read original article

Oregon is pushing solar energy at a premium price.

A new pilot project will reward a select group of homeowners and businesses with monthly checks for installing solar cells. Customers of the state's largest utilities will be funding the program through their electric bills. The owner of a 3-kilowatt system, a size typically installed on homes, could get monthly payments of more than $100 during 15 years, according to the Oregon Public Utility Commission.

Over the years, the incentive payments could be enough to cover the cost of the solar panels.

"We are trying to strike a balance between providing an incentive for solar development, while at the same time keeping an eye on controlling utility costs. If the initial rate is set too low, customers may be reluctant to sign up," said Ray Baum, the chairman of the PUC.

Three Oregon utilities — Portland General Electric, Pacific Power and Idaho Power — are taking part in pilot project. Only solar energy systems installed after July 1 are eligible for the incentive program. People who are interested in the program must file applications with the utilities and be accepted into a pilot project with limited space.

The pilot project is capped at a total of 25 megawatts — or enough electricity to supply roughly 2,500 homes. Utilities aren't prepared to take applications at this time, but the PUC expects them to be ready on the program's July 1 start date.

Oregon Gov. Ted Kulongoski introduced the solar incentive concept to the 2009 Legislature after seeing a similar program in Germany, said Rem Nivens, a spokesman for the governor's office. The PUC recently issued rules for the four-year pilot program.

"Right now, it's just a test to see how many people will participate," Nivens said. The program will help determine if a "feed-in tariff" is a viable option to increase the use of solar power in Oregon, he said.

Here is a quick overview of the solar incentive program:

-Utility customers will receive a monthly check and reduce their energy bills. Incentive payments are tied to the amount of solar energy generated. Electric meters will verify the amount of electricity generated by the sun.

-The incentive rate varies by region, with sunnier regions getting a slightly lower rate. In Marion and Polk counties, the incentive for Portland General Electric and Pacific Power customers is currently set at 65 cents per kilowatt hour.

The incentives aren't based on any market for electricity. They are well above what the utilities charge for electricity. For example, PGE bills its residential customers about 10 cents per kilowatt hour.

-Those entering the pilot program a year from now might be paid a different incentive. Every six months, the PUC can re-set the guaranteed fixed rate.

-At the current incentive rate, PUC officials estimate that a 3-kilowatt system in the Mid-Willamette Valley could produce enough solar electricity for incentives amounting to about $1,430 per year. A 5-kilowatt system could result in incentives of about $2,420 per year.

-There are restrictions on the size of systems that are eligible for incentives. The system's capacity cannot be more than 90 percent of the historical usage for a home or business.

-People taking part in the pilot program cannot take state tax credits or Energy Trust of Oregon incentives, although they may qualify for federal tax incentives for renewable energy projects.

-The pilot program is available on a first-come, first-serve basis. But the available capacity is divided into eight periods over four years.

-The 15-year guaranteed incentive rate will transfer to new owners if the home or business is sold.

-Utility customers will hire private contractors to install the panels. PGE recommends that customers allow solar contractors to file the program application paperwork on their behalf.

Matthew Lind, a solar energy consultant with Advanced Energy Systems in Eugene, said he expects the incentives will help open the market for residential solar installations. Businesses, however, are more likely to have the money to invest in solar panels, he said.

"You still have to have the cash available or be able to finance," Lind said. An entry-level solar power system for a home costs about $20,000, he said.

PUC officials said it's too early to determine how much the incentives will cost ratepayers.

Bob Jenks, the executive director of the Citizens' Utility Board of Oregon, a consumer watchdog group, said ratepayers shouldn't see a large increase in their bills because of the program's limited size. It's likely the pilot program will be popular with people looking to install solar cells, he said.

But providing a 65-cent per kilowatt hour incentive for electricity that sells for 10 cents per kilowatt hour can't work in the long term, Jenks said. Going beyond the scope of the pilot project would lead to a "dramatic increase" in electricity bills for ratepayers, he said.

Moreover, the program's goal of expanding the solar industry takes ratepayers into unfamiliar territory.

"I don't think it's the role of ratepayers to support industry. Economic development isn't a traditional role for utility rates," Jenks said.

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